In a welcome development, SIF Ireland is delighted to share that the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) has released two very timely and relevant reports that will be of interest to the Irish financial services ecosystem. The Central Bank of Ireland is a member of the NGFS.
The NGFS was launched at the Paris One Planet Summit on 12 December 2017. It is a group of Central Banks and Supervisors who voluntarily share best practices and contribute to the development of environment and climate risk.
The Guide for Supervisors gathers leading practices of the supervisory community and issues five recommendations for courses of action to be taken by NGFS members and beyond.
It is based on input received from NGFS members and work done by supervisors outside the network. The outcomes clearly show that worldwide supervisors are taking action.
- building their expertise and allocating resources
- undertaking climate-related and environmental risk analyses of their financial institutions
- publishing documents
- clarifying to financial institutions what is expected of them regarding climate-related and environmental risks.
It offers an overview of industry definitions and practices regarding environmental related risks’ quantification and mitigation.
This survey focuses on the work performed by financial institutions to track specific risk profiles of green, non-green and brown financial assets (loans and bonds), develop specific risk metrics and analyse potential risk differentials.
It aims to present a point-in-time snapshot of current practices among financial institutions.
The report shows positive trends among financial institutions to better account for climate related risks of their assets and suggests encouraging ways forward in the analysis via forward-looking methodologies.
Both reports are to be welcomed.